By the time North American gold markets opened, the yellow metal was weaker, even though the rate cut is one in a series of simulative monetary measures adopted by central banks in the past month or so. Ultra-loose monetary policy has been cited for a few years as one of the pillars of gold-market strength, so the question is, why hasn’t it given gold a jolt on Tuesday?

Part of the reason, market watchers said, is that monetary policy news is now acting more as a price support than a catalyst for strength. While accommodative monetary policy may act as a floor, other factors have a greater near-term influence, including investors’ continuous selling of gold exchange-traded funds, bearish technical charts and a general disinterest in commodities by investors.

At 11:20 a.m. EDT, June Comex gold futures were down $22 at $1,446 an ounce.

The Reserve Bank of Australia lowered their key interest rate by 25 basis points to a record low of 2.75%, pressuring the Australian dollar. The reason for the rate cut, the RBA said was that “the inflation outlook would afford scope to ease further, should that be necessary to support demand.”

Alan Bush, senior financial futures analyst at Archer Financial Services, said the rate cut was a slight surprise. “According to financial futures markets there was a 52% probability that the Reserve Bank of Australia would reduce their benchmark interest rate by 25 basis points. However, only eight of 29 analysts surveyed forecast the interest rate cut, which is why the Australian dollar fell so hard after the announcement was made,” he said.

The RBA’s rate cut comes on the heels of an interest rate cut last week by the European Central Bank and the Federal Reserve’s decision to continue with its $85 billion monthly bond-buying. Last month the Bank of Japan announced a larger-than-expected stimulus program to prop up the sagging Japanese economy by doubling the monetary base to 270 trillion yen ($2.9 trillion) by the end of 2014. Lastly, news reports say that the Bank of England will continue to keep its interest rate at 0.5% and its asset-purchase program at 375 billion pounds when it meets Thursday.

Gold’s weakness on Tuesday started after the RBA announcement. Jason Cerisola, head of trading, precious metals and foreign exchange for MKS Capital in Sydney, noted in an email to clients that “light selling was seen after the RBA decision (in the Asian session), pressuring the metal down towards the day’s lows.”

Bill O’Neill, one of the principals with LOGIC Advisors, said while the RBA cut was expected sometime this year, a move so soon was the surprise. Yet, O’Neill admitted: “gold’s reaction was a contrary result, especially as we’ve seen many central banks in cutting mode.”

He also noted how gold hasn’t responded as investors might traditionally expect it to behave following a rate cut. “Gold has effectively shrugged off the news,” he said.

analysts said the action of the RBA, along with other central banks, is more of a longer-term support than a short-term support and should be viewed this way. “This may not have had any immediate impact on the gold price, but it does show that more and more central banks are pursuing or continuing to pursue very loose monetary policy. Gold should thus remain in demand as an alternative currency against the backdrop of a possible devaluation race between currencies,” they said.

O’Neill said loose monetary policy is supportive for gold, but there’s a difference between being supportive for prices and giving the market a fresh reason to rally.

OTHER FACTORS INFLUENCING

Beyond the central bank activity, other factors are keeping gold from rising, he said. Commodities as a whole are under pressure as investors move from this sector into other sectors, particularly equities, which are at record highs for some indexes.

“We’ve see a rotation out of the commodities market, whether it’s gold, silver, copper, PGMs. When you have a major rotation like this, they (investors) don’t all of a sudden turn around and rotate back in,” he said, adding that the continuous selling by ETF investors is one hallmark of this rotation out.

Technical charts for gold are also bearish, even though prices are up about 9% from the low in the $1,320s scored last month. Several technical analysts point to strong resistance for June gold at $1,480, then $1,535.